BaucusCare provides incentives to end employer health insurance?

Posted by: steveegg on October 12, 2009 at 11:21 am

(H/T – Charlie Sykes)

Don’t take my “shocked, SHOCKED” word that the latest iteration of what my co-blogger Shoebox has termed PlaceboCare undermines the rationale for businesses that offer health insurance to continue offering it; take the words of Fortune editor-at-large Shawn Tully:

First, the Baucus bill would substantially increase the costs of coverage, for example by requiring rich benefits packages and coverage for Americans with pre-existing conditions at far less than their actual expense. At some point, employers will decide that the appeal of offering insurance as a tool for recruiting and retaining employees no longer compensates for its soaring cost.

Second, the bill is based on perverse incentives that no one is even discussing. The subsidies it offers to citizens are so rich that if companies were to drop their plans, the majority of workers would get the same lavish coverage, and extra cash in their paychecks to boot. “Those two factors will change the equilibrium,” says (Cato Institute economist Michael) Tanner. “With the government providing huge credits, employers will feel a lot less guilty about dumping their plans.”

In fact, the Baucus bill is practically inviting employers to do just that: It imposes a fine of just $400 per employee on companies that shed their plans.

You may say, “So what?” Tully goes on to explain that a wholesale exit by employers from the health insurance market will by necessity blow the CBO deficit projections of the Baucus versoin of PlaceboCare up because it assumes that the level of employer-provided health insurance will remain constant. The math is too long to excerpt, but suffice it to say that as the number of employees kicked to the “self”-funded and (in many cases, taxpayer-subsidized) exchange curb grows, so does the gap between the cost of subsidizing the coverage of those employees and the additional taxes taken in.

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4 Responses to “BaucusCare provides incentives to end employer health insurance?”


  1. What!? I’m shocked. I thought Obama promised that we could keep our healthcare plans?

  2. Brontefan says:

    Obama promises are like the wind; they change direction at whim. This ObamaCare is not about health care or repairing the problems in the health care industry. It is clearly about control—taking over another major part of the US because controlling the banks and most the car companies –is not enough to completely destroy this country & our way of life. It is about damaging this country to the point where socialism must be the only choice left. And some had better wise up and smell the coffee before our way of life is all a thing of the past. It is so frightening that I cannot even remain friendly with former “friends” who voted this Marxist into power. I have always believed a one-sided Congress was a dangerous thing–no matter whether it is Dem or Rep—it is always best to have a well balanced Congress. Otherwise, they shove legislation at you with 1300-page bills that NO ONE READS or has ambiguous language that can be arbitrailiy interpreted later. Now, our administration [culture of corruption] is whining about Fox News Network because it is one of the only rational voices in journalism.

  3. Carlos says:

    Does anyone realize or care that we, the people, will be taxed for insurance for 3 years before the guvmint actually finds enough welfare suckers to man the program, and that the CBO report essentially says the projections are based on 7/7 – that is, seven years of taxes and seven years of care. What that is in fact doing is decreasing the costs by nearly 50%, or increasing theoretical payments nearly 50%.

    Either way, Duh-1 and his on-the-Hill-gang are playing everyone in the United States for fools. To which the proper answer, of course, is, “I’m shocked! Shocked, I tell you!”

  4. Otter says:

    It is time for a New word.